Digital Infrastructure, Private Credit And Energy Transition Will Open Opportunities

The consensus price target for HMC Capital has been revised down from A$6.49 to A$5.56 due to analysts’ concerns that, despite some tariff relief improving Honda’s U.S. market access, overall trade barriers remain elevated and risk/reward has become more balanced.

Analyst Commentary

• Japanese trade deal reduces tariffs on vehicles imported to the U.S. from Japan to 15% (from 25%), improving Honda's competitiveness versus U.S. domestic automakers.
• Honda, along with other Japanese automakers, will benefit from lower cost of entry into the U.S. market due to the new tariff rates.
• Despite improved access, tariff rates remain higher than pre-trade dispute levels (previously 2.5%).
• Ford and GM face ongoing competitive disadvantages as tariffs on imports from Korea, Canada, and Mexico remain elevated.
• Bearish analysts point to recent downgrades citing balanced risk/reward as drivers for more cautious price targets.

What's in the News

• HMC Capital is reportedly seeking buyers for its $950 million renewable energy portfolio acquired from Neoen Victoria less than a year ago, following challenges in raising sufficient funds and delays in settlement (Key Developments).
• The group experienced a significant drop in share price (over 17%) to $4.22, erasing around $400 million in market value after news emerged of funding difficulties, management turnover, and the sale process (Key Developments).
• Lazard is managing the sale process, with final bids received from major institutions including CDPQ and Copenhagen Infrastructure Partners; potential options under consideration include a partial sale, strategic partnership, or spin-off to a fund for institutional investors (Key Developments).
• The U.S. Commerce Department imposed a 93.5% anti-dumping duty on Chinese graphite—a key battery input—raising effective duties to 160%, potentially impacting auto and battery supply chains relevant to companies such as Honda (HMC) (Bloomberg).
• The European Commission is preparing retaliatory tariffs on U.S. cars (including those from Honda) in response to new American tariffs on EU products, potentially affecting HMC and other global automakers’ European businesses (FT).

Valuation Changes

Summary of Valuation Changes for HMC Capital

• The Consensus Analyst Price Target has significantly fallen from A$6.49 to A$5.56.
• The Consensus Revenue Growth forecasts for HMC Capital has significantly fallen from 25.9% per annum to 10.8% per annum.
• The Net Profit Margin for HMC Capital has significantly risen from 41.16% to 64.79%.